The relatively small number of landlords who use Purplebricks to handle tenants for their properties appear to face an uncertain future.
The agency - which has had years of volatile trading and diminishing reputation, led by a string of different management figures - says it’s considering what it euphemistically calls “an alternative ownership structure” to “better realise the potential of the group.”
It says this “may or may not result in a sale of the company or some or all of the group's business and assets.”
The news came in an admission from the company that its latest turnaround plan, seemingly based on higher fees and fewer staff, “has involved more disruption to the sales field than originally envisaged."
The troubled lettings division is to be “streamlined” - it’s already small, and Purplebricks gives no idea how much smaller it is to become under this latest cut.
Meanwhile on the sales side, instruction levels achieved in the third quarter of the company’s financial year were lower than expected, prompting the firm to admit that the new Purplebricks mortgage division - formed only two months ago - will have less investment than originally planned.
It was only eight weeks ago that the latest chief executive of Purplebricks - Helena Marston, whose appointment to the role last year was delayed after it was discovered that in 2014 she voluntarily declared herself bankrupt - promised she had “a plan to grow our lettings business.”
The agency’s lettings division has been in the eye of the many storms surrounding Purplebricks in recent years.
Late in 2021 the Daily Telegraph broke the news that Purplebricks had - for an unspecified period of time - failed to properly serve legally-required documents to tenants explaining their deposits had been put into a national protection scheme.
At the same time its then-head of lettings quit with immediate effect.
Purplebricks at the time put the financial liability of the error at between £3m and £9m but the Telegraph said it could be up to £30m.
In her latest statement, issued at the start of the weekend, Marston claims: “We have undertaken a huge amount of work in the last nine months to improve our sales business, raise standards, establish Purplebricks Financial Services, and stabilise lettings, all of which means the company has never been in better shape for the future.
“Yes, the actions we have taken have caused more short-term disruption to our Q3 performance than anticipated, but we remain confident in returning to positive cash generation in early FY24.
“We recognise that our upside potential is not currently reflected in our market valuation, which is why the entire board has therefore concluded that a strategic review is now in the best interests of all shareholders.”
In this case the words “strategic review” may well mean the sale of the firm.
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Surely it makes more sense to use a good small local agent that you can talk to face to face
Totally agree. The stupid name would also ring alarm bells for me.
Good article. Well done for incisive comment. Probably means it's run out of money, facing prosecution for it's letting business and perhaps it's going into liquidation!
The directors will milk any assets and pay themselves their bonuses first before liquidation
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